Eminent Domain: What You Need to Know Before Agreeing to Anything

Eminent domain is the constitutional power that the government uses to acquire people’s property and convert it to public projects such as roads, sewers, and storm drains.

Eminent domain can be used to take all a person’s property or only a portion of it. It is also used to acquire temporary use of the property or to compensate a person when a public improvement negatively impacts their property. Regardless of the taking, the Fifth Amendment provides the government may only exercise this power if they provide just compensation to property owners.

Generally, the government, directly through their agencies or private sector real estate representatives, first tries to negotiate a “fair deal” with the property owner. In nearly all instances, negotiations are initiated by the government before any lawyers get involved. This is no accident – in general the government does not want you to have the benefit of your lawyer’s input during the process. The government representative, employing all the skills of a snake oil salesman, will attempt to persuade the property owner to take egregiously unfair government offers without being informed about things like just compensation and allocation of risks.

Not to long ago we represented a property owner whose land was needed temporarily during the excavation and construction of a storm drain. This project involved the excavation of a 400-foot ditch wide and deep enough to bury a nearly eight-foot diameter cement pipe. This was a substantial construction project involving numerous workers and heavy equipment—dangerous work to be sure. Not only did the city government make a ridiculously low offer of compensation, it included as a condition that the property owner would assume all liability if anyone was injured during construction. This city initiated project was of no benefit to the property owner, and the attempt to pass off liability onto him was clearly contrary to his best interest and quite frankly, offered in bad faith.

In addition, along the pathway of the intended construction was a huge 50-year-old pine tree whose roots would be severed while digging the ditch. While there was less than a 50% chance the tree would survive, the city offered no concession for the economic, aesthetic, and psychological impact to the property owner in dealing with the future consequences of the likely death of this huge tree after the government project was completed.

The property owner realized he was being taken advantage of and retained our counsel. We were able to negotiate fair compensation for the property owner which was tens of thousands more than the initial offer and shift the risk of injury or mishap to the city where it rightfully belonged – exactly what the government hoped to avoid by negotiating without any lawyers involved.

In another case, the governmental entity sought to acquire a commercial property located along the path of a freeway widening project. The building was fully occupied by high paying commercial tenants who enjoyed the visibility of their premises and signage to the hundreds of thousands of potential customers driving by each day on the freeway. Shockingly, before eminent domain negotiations were commenced, representatives from a governmentally retained non-public agency approached all the tenants and offered them money to move, leaving the owner without rental income until the suites could be re-leased.

Then, after the eminent domain proceeding formally commenced, while purporting to establish fair compensation for the freeway-adjacent property, the government’s appraisers gave no weight to the fact the commercial property obviously substantially benefitted from its visibility to potential customers passing on the freeway. Instead, the government appraiser’s analysis of fair value was based on the visibility afforded to the property by the minimal traffic that passed on an adjacent frontage road. Based on this patently improper analysis of the desirability of the commercial location, the government’s initial offer was absurdly low.

After receiving the lowball offer, the property owner wisely realized he needed legal representation, and before it was too late, he contacted our firm. An economic analysis performed by appraisers retained at our firm’s behest demonstrated that the government’s offer was more than a million dollars below the market value that this high visibility location warranted. Our firm was able to negotiate a final settlement for our client with compensation very close to our opinion of value. We were also able to obtain compensation for all lost rental income incurred because of the improper actions by government’s hired representatives.

These are just a couple of examples of the types of potential harm a property owner can face when the government exercises its power of eminent domain to take property for public use. The lesson is clear –the time to retain counsel when you learn your property is targeted for eminent domain is immediately—when you are first approached.

The sooner competent eminent domain counsel is brought in, the less likely you will be subjected to the dubious and, in many instances improper conduct of government representatives.

You can rest assured that, behind the scenes, the government has lawyers with tons of experience on their side before they even begin the eminent domain process. Experience teaches us that they are not using all that knowledge and expertise to benefit the property owner. Property owners need representation from experienced eminent domain counsel to protect their interests and even the playing field.

John Messina heads Messina & Hankin's Temecula Valley Office and is a litigation attorney with top executive-level, hands-on experience as a broker, real estate developer, and mortgage banker. He is also a published author,